Gartner analyst Michael Gartenberg tweeted that he thinks the Kindle Fire is more of an Apple iPod Touch replacement than an iPad-killer. Indeed, Amazon seems to be going after its core audience of e-reader customers who are interested in a tablet but not willing to spend a lot of money. In other words, this device is geared toward customers who may be considering buying the Barnes & Noble Nook Color rather than those with their heart set on an Apple iPad.

Has this idiot used an iPod touch? In no way does a small, phone-sized tablet (note the oxymoron) with WiFi and two cameras compete with a 7" tablet without cameras made primarily to expose eBook users to the Amazon controlled niche of the Android ecosystem. One you have if you like iTunes and iOS and iPods but don't have an iPhone (whether that means you have a phone-only cellphone or simply dislike Android but carry one anyhow). The touch is a like a smartphone without the monthly fee. It's for cheapskates, kids, and WiFi addicts (though those Peels that give your 3rd gen touch shareable 3G look really cool). The other you get if you like to read books or want an inexpensive tablet. Who reads books on their iPod when they don't have to? I've got one. Not me.

The real beauty of the Fire is exactly what I've written above. There are those that trust Amazon and Kindle for their eBook content. Honestly, the Kindle is great. Having a book on my phone, computer, and my e-ink device, all at the same time, allow me to read most anywhere -- planned times, outdoors, in the line at the DMV. And having an Android device, even a woefully inadequate one like my Optimus V, is wonderful. It's too bad the Fire doesn't have 3G, as that's where the magic really happens.

This certainly explains the Amazon app store. I've liked that store a bit better than the stock Android one. It's a nice app, though perhaps not quite as well stocked with apps as I'd like. But there's infrastructural requirement number one taken care of.

It also explains the big deal about the big deal with Fox streaming content from Amazon as posted on Amazon.com's front page last night. It really doesn't matter if Amazon doesn't have as much to stream as Netflix. What matters is that their installed Kindle user base partially translates to their Android tablet, and from the tablet to the Amazon controlled content. We should also note that those are two completely different niches -- one watching video on a tablet, the other largely their TV. Amazon, doing well, I assume, with tablets that just do eBooks, is happy with a solid cut of the former.

We really should have seen this coming. Amazon is the only real competitor to Apple for content out there. Check out banshee, an iTunes equivalent mainly for Linux. Their plug-in for the iTunes Music Store? Amazon's store, and they make a solid percentage from each sale via Amazon's store. Amazon is iTunes, but open. That's always been Amazon's strength and competitive edge against Apple. Apple initially gave you DRM-laden music files with protected AAC. Amazon gave you wide-open mp3s. Apple followed suit. Amazon laid down an app store that could be used on any Android device made by anyone. You get used to using their market (and its free app a day), and poof, another barrier to entry down for the Fire. They make deals for streaming content. You get used to using Amazon's movie player on your PC. Another barrier down. They have cloud-based music. You get used to storing your music in the cloud and *poof*, you're used to using it on the Fire too. Amazon's beaten Apple to cloud-based music.

I've got to think a 3G Fire is in the cards for next year.

In any event, this is pretty impressive. I'm an AMZN stockholder now. And if I'd been smart enough, I'd've bought yesterday, like I meant to. But even after they lose some of these gains tomorrow (and I buy another share or two), they'll have a lot of room to shoot up. At $199 for the Fire, either Apple starts running two iPads at once, like they are with the iPhone 3 & 4 now, or they cede low-cost tablets to Amazon completely -- and the content those tablets' owners purchase.